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Minimum Wage Hikes – What if….

September 23, 2016

by commonwealth

What if the coming minimum wage increases could be used to build financial security and opportunity for working families?

Since 2015, significant momentum for minimum wage increases has spread across states and employers, affecting millions of low-wage workers. The recent energy around minimum wage hikes is related to widespread “Fight For 15” protests around the US that originated in a large strike by New York fast food workers in 2012. Supported by SEIU and national organizations like NELP and EPI, this movement has already led to approximately 11 million US workers being covered by recent local and state minimum wage hikes. And more may be coming: 8 states, 12 municipalities, and some large employers are considering proposals to raise their minimum wages.

These changes amount to a 10% to 50% wage increase, targeted to people who barely make ends meet on their current incomes. These workers are women, racial minorities, people without higher degrees, adults (over 83%) and parents. Fifteen percent (15%) of all US children – over 10MM – have at least one parent earning near-minimum or minimum wage.

How do we build on this movement to ensure that these hard-fought gains lead to long term financial security and opportunity? We must build a second wave campaign, “Save your Raise," that encourages and supports workers to make deliberate, unpressured choices – preferably in advance – about how best to use wage increases to achieve their financial goals.

Without thoughtful action, industries that already target low-wage workers with goods and services will likely devise new ways to capture a substantial portion of these income increases, and/or to strip from workers any assets they are able to accumulate.

Commonwealth’s work has found that the most impactful interventions designed to build financial security are those developed in partnership with the people directly impacted by financial insecurity. Campaigns that require individuals to take actions, such as new financial behaviors (like saving and paying down debt), must be attractive, engaging and able to elicit enthusiastic and voluntary use. Any of us are more open to new actions when we believe it is our choice, when the choice is appealing, and when we do not feel patronized or coerced. We call this process “consumer-centric” engagement and believe it is a key to the success of a Save your Raise Campaign.

All sectors would need to play a role in this effort if we are to be successful. Employers and unions are well positioned to reach workers. Government should signal that financial security is a public concern. The financial services industry must provide the products, tools and services to build long term financial security. And the social sector can weave together coalitions of these essential stakeholders and advocate for action. The campaign could be built in collaboration with the existing coalitions that have been fighting for so long and so hard for these increases.

The time to take action is now, as the first substantial wave of wage increases is slated to begin in 2017. The ideal time to assemble coalitions, test strategies, and develop tools to reach and prompt action by workers is before widespread increases have begun. The fact that the date of increases is already clear is not only an advantage for individual workers, but can also create a sense of “racing to beat the deadline” among key actors.

A national focus on linking wage increases to greater financial security and opportunity has the potential to spark a national conversation about the need for broad based economic equality. A commitment to apply the principles of consumer-centric engagement to this work promises to ensure these efforts resonate with workers themselves, and lead to true economic mobility.